Call me old fashioned, but if you're already on a limited budget, why are you worried about leaving anything to the kids.
The whole point of saving for retirement is to USE those savings IN retirement, not saving it for the kids. Sure, one of the halmarks of Western society is that it is building wealth through inheritance, but there is a point where each successive generation must build more wealth or lose the whole fortune. The only real suggestion that made sense would be to bequeath a few sessions with an investment counselor to teach the kids how to properly manage their money.
A reverse mortgage eats up a bequest, fast. They have high fees which are generally amortized so the balance will grow fast, destroying pretty much all the equity in the home.
That doesn't mean they are bad products. You get to live in your home until you die and still turn all that illiquid house into liquid cash. You can even downsize your house and still get a RM. You can get a multifamily (2-4) property and rent out the other units for more income. There's no excuse anymore for seniors having no cash to live on if they have a house with lots of equity. Despite 30% declines in house prices in many markets, there is still tons of equity in homes: over $4 trillion, held by seniors.
The senior can even sell the house later and pay back the loan if the market improves. The equity will still be there if they only drew lightly on the line of credit.
Boomers are already leaving us with debt. Why should we expect they'll leave us any bequest? Abortion should have been legal in 1946, but who knew these brats would turn out this way? We should call them the spider generation because they eat their young.
While this is not meant as a defence for anyone, I have personally noticed that as the financial industry became more and more focused on small individual investors it has also become a far more exploitative industry. In a lot of ways I think the Baby Boomers look like a far worse generation than their parents when it comes to their personal finances because the opportunity for self destruction wasn’t as available for their parents as it was for the boomers; and you can see this in how the Baby Boomer’s parents’ generation made foolish decisions (like getting reverse mortgages) when the opportunity presented itself.
Ok, the survey says only 10% say that leaving financial assets provides a lasting legacy. Yet they spend the rest of the artcle explaining how to leave a financial legacy.
Why is leaving a financial legacy to your heirs a good thing?
Why would I want them to be spoiled brats?
Why would I want them to be lazy because they received a nice inheritance?
Why would I want them to expect handouts?
I'd much rather them learn to live within their means, to learn to work hard and to be self-reliant.
The article forgets another important factor; many of the boomers have spent tens of thousands of dollars sending their kids to college for useless degrees. Maybe the boomers would have more money to leave if they had forced their kids to work their own way through college.
Am I the only one who sees the irony of these Boomers talking about the greater importance of leaving their descendants with inheriting 'Values and Life Lessons', while frantically waiting for their own, frugal parents to snuff it. Not only are these people financially bankrupt, but their culture of entitlement and immediate gratification are only valuable life lessons if taken as cautionary tales.
Call me old fashioned, but if you're already on a limited budget, why are you worried about leaving anything to the kids.
ReplyDeleteThe whole point of saving for retirement is to USE those savings IN retirement, not saving it for the kids. Sure, one of the halmarks of Western society is that it is building wealth through inheritance, but there is a point where each successive generation must build more wealth or lose the whole fortune. The only real suggestion that made sense would be to bequeath a few sessions with an investment counselor to teach the kids how to properly manage their money.
Enough of a rip for you? ;)
A reverse mortgage eats up a bequest, fast. They have high fees which are generally amortized so the balance will grow fast, destroying pretty much all the equity in the home.
ReplyDeleteThat doesn't mean they are bad products. You get to live in your home until you die and still turn all that illiquid house into liquid cash. You can even downsize your house and still get a RM. You can get a multifamily (2-4) property and rent out the other units for more income. There's no excuse anymore for seniors having no cash to live on if they have a house with lots of equity. Despite 30% declines in house prices in many markets, there is still tons of equity in homes: over $4 trillion, held by seniors.
The senior can even sell the house later and pay back the loan if the market improves. The equity will still be there if they only drew lightly on the line of credit.
Boomers are already leaving us with debt. Why should we expect they'll leave us any bequest? Abortion should have been legal in 1946, but who knew these brats would turn out this way? We should call them the spider generation because they eat their young.
While this is not meant as a defence for anyone, I have personally noticed that as the financial industry became more and more focused on small individual investors it has also become a far more exploitative industry. In a lot of ways I think the Baby Boomers look like a far worse generation than their parents when it comes to their personal finances because the opportunity for self destruction wasn’t as available for their parents as it was for the boomers; and you can see this in how the Baby Boomer’s parents’ generation made foolish decisions (like getting reverse mortgages) when the opportunity presented itself.
ReplyDeleteOk, the survey says only 10% say that leaving financial assets provides a lasting legacy. Yet they spend the rest of the artcle explaining how to leave a financial legacy.
ReplyDeleteWhy is leaving a financial legacy to your heirs a good thing?
Why would I want them to be spoiled brats?
Why would I want them to be lazy because they received a nice inheritance?
Why would I want them to expect handouts?
I'd much rather them learn to live within their means, to learn to work hard and to be self-reliant.
I always thought I'd get better financial advice from a homeless guy than a financial planner.
ReplyDeleteThe article forgets another important factor; many of the boomers have spent tens of thousands of dollars sending their kids to college for useless degrees. Maybe the boomers would have more money to leave if they had forced their kids to work their own way through college.
ReplyDeleteAm I the only one who sees the irony of these Boomers talking about the greater importance of leaving their descendants with inheriting 'Values and Life Lessons', while frantically waiting for their own, frugal parents to snuff it. Not only are these people financially bankrupt, but their culture of entitlement and immediate gratification are only valuable life lessons if taken as cautionary tales.
ReplyDelete